[Code of Federal Regulations]
[Title 26, Volume 8]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.702-2]

[Page 357]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
Determination of Tax Liability--Table of Contents
 
Sec. 1.702-2  Net operating loss deduction of partner.

    For the purpose of determining a net operating loss deduction under 
section 172, a partner shall take into account his distributive share of 
items of income, gain, loss, deduction, or credit of the partnership. 
The character of any such item shall be determined as if such item were 
realized directly from the source from which realized by the 
partnership, or incurred in the same manner as incurred by the 
partnership. See section 702(b) and paragraph (b) of Sec. 1.702-1. To 
the extent necessary to determine the allowance under section 172(d)(4) 
of the nonbusiness deductions of a partner (arising from both 
partnership and nonpartnership sources), the partner shall separately 
take into account his distributive share of the deductions of the 
partnership which are not attributable to a trade or business and 
combine such amount with his nonbusiness deductions from nonpartnership 
sources. Such partner shall also separately take into account his 
distributive share of the gross income of the partnership not derived 
from a trade or business and combine such amount with his nonbusiness 
income from nonpartnership sources. See section 172 and the regulations 
thereunder.